U.S. Economic Collapse & the End of US Hegemony

This is the very best and the simplest that I have seen the world's economic turmoil explained. It is put in terms that a twelve year old can understand and explains how we got where we are, why we can't get out of it, and where it is leading. This is a video that covers our current financial practices. It does not delve into financial manipulation, or a New World Order conspiracy...simply economic practices that are destined to fail. Everyone who watches this will better understand that what we are seeing ahead is an oncoming train.

China cannot use its Treasury holdings as leverage. Here’s why

FOLLOW THE MONEY – FOLLOW CHINA, RUSSIA AND INDIA

June 28, 2018

Whilst the US government worries about the military threat of Russia, and the trade deficit with China, they show no concern for the real problems. To understand what is really happening, all we need to do is to Follow the Money. The flows of real money reveal where global economic power is moving.

The US has not had a real budget surplus for almost 60 years and has run balance of payment deficits every year since 1975. A country that lives above its means for over half a century is technically and economically bankrupt. Its debt should have zero value and so should its currency. But the US has skilfully avoided bankruptcy so far by having the reserve currency of the world and being the biggest military power.

THE WORLD’S MOST INDEBTED COUNTRY

Both Russia and China can see the writing on the wall. They understand that the world’s most indebted country cannot solve its debt problem by issuing more debt. That is why Russia, China together with India are buying most of the global gold production every year.

In May 2018 Russia added another 600,000 oz or almost 20 tonnes to its gold reserves. Since January 2018, when Trump became president, US debt has increased by 6% or $1.1 trillion to $21.1 trillion whilst Russia has added another 9 million oz of gold and are now holding $80 billion of gold reserves.

THE WORLD WILL NO LONGER FINANCE US EXCESSES

So whilst the US economy is taking the road to perdition, Russia knows that the only money that will survive is gold. Just like it always has! The world has for years financed US debt by buying US treasuries. But we are now seeing a marked change. Many countries are currently liquidating US debt paper. They know what will happen to US debt and are trying to get rid of their holdings in an orderly manner to avoid treasuries crashing together with the dollar. This is what will happen at some point in the next 1-3 years. Global investors will panic out of dollar denominated bonds leading to a crash of both the US currency and dollar debt.

The Chinese know this but their US treasury holdings are so large that they need to go slowly in order not to shoot themselves in the foot. In the end China is likely to take a major loss on its dollar treasury holdings but that is the price they have been willing to pay in order to build up its economy and manufacturing sector by financing US deficit spending. Simultaneously China has invested heavily in the resource sector in most parts of the world. China understands that commodities are massively undervalued compared to the bubble asset markets. At the same time, China has continued to buy a major percentage of annual goldmine production since 2008, taking total Chinese purchases to 16,000 tonnes.

SELL US TREASURIES – BUY GOLD

For anyone who wants to Follow the Money, just look at the chart below how Russia is dumping US treasuries and adding to its gold reserves every month. Because Russia knows that gold will surge and US treasuries crash.

From insignificant gold holdings in 2007, Russia today has $80 billion of gold. And since 2010, Russia’s US treasury holdings have gone down by 89% to $20 billion today.

And just look at China and India. Their gold purchases in the last ten years amount to 25,000 tonnes. This is virtually the total global gold mine production during that period. These countries understand what will happen to the financial system and to most currencies. So again Follow the Money.

DOUBLE WHAMMY FOR TREASURY INVESTORS

Many investors are holding US treasuries as a flight to safety. Well, I certainly agree with the Russians and the Chinese. Treasuries must be one of the riskiest investments you can hold today and is as far from wealth preservation as you can ever get. The dollar will go to zero – it is already down 98% since 1913 – and treasuries will go to zero as the world realises that US debt can never be repaid with real money.

So investors in US treasuries can expect the most momentous double-whammy. Whatever they don’t lose on the dollar going to zero, they will definitively lose on US debt instruments. This means that just in US treasury debt, over $21 trillion, and growing, will explode or more accurately implode.

HISTORY’S ONLY SURVIVING CURRENCY

What is the best currency to hold your assets in? This is a question I often get asked. The answer is really so easy but still most people never see the obvious. If something has declined by 97% or more, is it going to stop there? Not likely!

All currencies have lost 97-99% in the last 100 years so it is extremely likely that they will lose the remaining 1-3%. Therefore why try to pick the best of a useless lot when they will all lose all their value.

There is only one currency that stands the test of time, which is gold of course. It is the only money that has survived in history.

WITH A 5,000 YEAR SUCCESS RATE, WHY BET AGAINST GOLD

Gold is the only money to hold from now on until the financial system has been reset or has imploded. One thing is certain, there will be no orderly reset. No central bank or government hocus pocus can ever make $2 quadrillion of debt and liabilities (25x global GDP ) disappear by waving a magic wand.

Gold is money and gold is instant liquidity. And if for a while there is no paper money to exchange it against, gold can always be used for barter, just as it has throughout history.

By holding cash in a bank in whatever currency, it will either become worthless due to endless money printing or the banks will lose it all in their futile attempts to repay all depositors their money which has been lent out 10 to 20 times. Most banks have fraudulently accepted depositors money, knowing that they would never be able to repay it. This crazy Ponzi scheme works as long as the world believes that printed money is real money. But when the music stops, everyone will realise that it wasn’t money at all but pieces of paper or electronic entries that everybody called money. At that point fiat money will have zero value and few people will understand that $, Euros, Yen etc in the 100 of trillions can just go up in smoke without any trace.

Much better to hold an asset like gold which is no one else’s liability and which has zero counterparty risk, as long as it is held in physical form and outside the banking system.

Russia liquidates nearly all its holdings of US debt & invests money in gold

The Central Bank of Russia has continued getting rid of US Treasury bonds in August. The share of Russian investments in American debt is getting close to zero.

Russian investments in US securities as of August have fallen to just $14 billion. Back in 2011, Russia was one of the largest holders of US debt with a $180 billion investment.

The reason is not only about politics and US sanctions against Russia, a broker at Otkritie bank Timur Nigmatullin told RIA Novosti. The US Federal Reserve is hiking interest rates, which makes American bonds cheaper, he said.“Russia has almost dropped out of the list of holders of US government debt, being the 54th largest holder.”

“A further sale of US Treasury bonds by Russia will most likely be compensated by buying gold and opening short-term deposits at banks,”he said. The share of precious metals in the country's foreign reserves has reached a record 18 percent, closely approaching the share of dollar investments.

The largest investors in US debt, China and Japan, have also cut their holdings. Chinese holdings of US sovereign debt dropped to $1.165 trillion in August, from $1.171 trillion in July, marking the third consecutive month of declines. Japan has slashed its holdings of US securities to $1.029 trillion in August, the lowest since October 2011.

The reason for holding money in US bonds is global trade, which is still dominated by the dollar, director of macroeconomic analysis at Expert RA Anton Tabah told Izvestia daily. So, countries are forced to have a lot of dollars in cash, and US bonds are the best option for that.

India and Turkey have followed Russia's lead. Turkey has dropped out of the top-30 list of holders of American debt, while India has been liquidating its investment for five consecutive months to $140 billion in August.

USA is paying 26x as much interest on its debt as either France or UK.

Since the USA has been the anchor for the entire international monetary system since the end of WW2, and that anchor came detached in 1971 (supposedly "temporarily"), you can see why the Anglophone mass media are silent on this. It's precisely this de-anchorage that has allowed USA (and others) to inflate their economies with debt-fueled budgets.

If the media were to acknowledge that there is no anchor to the entire international monetary system, then they will induce panic and a massive crash. I almost wish I didn't know what I know. Thatcher was able to pay off the UK's national debt by selling off the state-owned industries/assets. There's nothing left to sell now.

If you go into the article, notice how often they blur the distinction between Trump as POTUS and Obama as former president. I've seen this many times, where Obama is implicitly still the president of the USA. I don't remember any time in my life where I've seen a former POTUS act/presented as if he was still in power.

I noticed that when Trump was first elected, the media would deliberately refer to him as Mr Trump not President Trump - altho they seem to have finally weaned themselves off that.

Yes, that's why that Schnabel video is so gratifying. If Trump gets a 2nd term, he will have time to do things like indict Obama and Hilary for electoral fraud and other misdeeds, and that will put a stop to the whole Leftist charade.

And of course, there is no other time in anyone's life when the previous president has stayed on in Washington causing mischief. But still, Obama is the rule breaker bringing change, so what do we expect?

The good news is that after Obama ruled by executive order (I've got a pen and a phone), all the Democrats complaints about Trump's unconstitutional use of executive order, just seems so lame :-)

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